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Feb 19, 2015
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UK's Asda to invest £600m in stores after sales fall

By
Reuters
Published
Feb 19, 2015

LONDON, United Kingdom - Asda, a unit of Wal-Mart Stores Inc, will invest 600 million pounds ($926 million) in new stores and refurbishing old ones as the British supermarket operator responds after a fall in fourth-quarter sales.

Sales at stores open more than one year, excluding fuel, fell 2.6 percent in the 12 weeks to Jan. 4, its fiscal fourth quarter, said Asda, which trails UK market leader Tesco by annual revenue.

That was worse than the 1.6 percent fall it saw in the third quarter.
Chief Executive Andy Clarke said the retail market remained "in one of its most challenging and changeable periods in history", with Britain's leading supermarkets losing out to cheaper discount rivals and consumers' shopping habits changing.

British consumers are shopping around for the best prices, buying little and often and increasingly opting for convenience stores or online shopping rather than large out-of-town sites.

Of Britain's so called "big four" supermarkets - Tesco, Asda, Sainsbury's and Morrisons - Asda's market share has been the most stable over the last couple of years.

However, industry data last week showed it was the worst performing of the leading chains over the 12 weeks to Feb. 1. The data also showed Tesco returning to sales growth for the first time since Jan. 2014 and Morrisons' best outcome since Dec. 2013.

Asda said on Thursday it would spend 600 million pounds on improving stores, building 17 others and introducing over 150 remote click and collect sites in 2015.

All of Britain's big four are losing share to German discounters Aldi and Lidl and are cutting prices and improving stores and service to hold onto shoppers.

Asda was the first of the big four to lower prices, saying in November 2013 it would spend 1 billion pounds on reductions over five years. But it also stopped issuing money off vouchers over a year ago, calling them short sighted "gimmicks".

Having delivered positive like-for-like sales in the first two quarters of its financial year, they turned negative in the third quarter. Some analysts reckon improving momentum at Tesco and Morrisons is impacting on Asda's performance.

£1 = $1.54
 

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